Ryanair submitted its latest concessions to the European
Commission last week and they were sent to competitors and
customers for comments on Jan. 21, said the people, who asked
not to be identified because the talks are private. Some 43
routes would go to Flybe Group Plc (FLYB), with International
Consolidated Airlines Group Plc (IAG)’s British Airways taking three
using London’s Heathrow airport, the people said.

Flybe is in discussions with Ryanair “about the possible
transfer of a number of aircraft and operating routes as part of
the package of concessions Ryanair has submitted to the European
Commission,” the Exeter, England-based airline said today.

Ryanair, Europe’s biggest discount airline, owns about 30
percent of Aer Lingus and in June renewed an attempt to buy the
rest. The EU blocked a takeover effort five years earlier,
saying it would create a monopoly for Irish flights. Ryanair’s
plan has also drawn opposition from Aer Lingus and Ireland’s
government.

“It does appear Ryanair are very keen to get Aer Lingus
and are willing to make whatever concessions necessary to make
the deal happen,” said Mark Murnane, head of trading at Dublin-
based spread-betting provider Marketspreads Ltd. “The big
sticking block is that the government has already said no to
selling its stock.”

Ryanair Chief

Ryanair Chief Executive Officer Michael O’Leary said
yesterday that the company was “trying to tweak” earlier
proposals to address regulators’ competition concerns over the
694 million-euro ($924 million) bid for Dublin-based Aer Lingus.
He expects a positive decision from the EU by the end of next
month, he said in an interview in Rome.

Ryanair has said it could exit all 46 Dublin routes that
overlap with Aer Lingus and that several rival carriers are
interested in competing at Irish airports. IAG signed a non-
binding agreement in December to buy landing slots at Heathrow
airport from Ryanair if it completes the planned takeover.

‘Justifiable’ Opportunities

A reorganization of Flybe announced today “doesn’t
preclude us from taking on opportunities as long as they are
well-financed and are justifiable in terms of being supportive
and additive to the business,” Flybe Chief Executive Officer
Jim French said today in a conference call. He spoke before the
company confirmed it’s in talks with Ryanair about the routes.

British Airways paid Flybe about 130 million pounds ($206
million) when the long-haul carrier gave up its regional routes
in 2006, French said. The payment ensured that Flybe could
“complete the restructuring adequately and properly,” he said.

“Clearly, if somebody knocks on our front door and has an
offer or a deal that is of similar appeal to that, then we’d be
very interested,” he said.

The commission said today it extended until March 6 its
deadline to rule on the Ryanair proposal for Aer Lingus, without
specifying a reason. Antoine Colombani, a spokesman for the
commission, declined to comment.

Government Concerns

The Irish government, which owns 25 percent of Aer Lingus,
said last month that Ryanair’s remedies offered until then
didn’t satisfy its concerns and that it wouldn’t support any
offer that would significantly undermine flight connections from
the country.

EU officials asked Ryanair earlier this month to come up
with further concessions after they identified shortcomings in
remedies proposed by the carrier in December, two people said
previously. The company’s initial offer last year also failed to
convince regulators, two people said in November.

The EU said in August that the takeover could eliminate
competition on a large number of routes and few new competitors
are likely. The Brussels-based authority blocked Ryanair’s bid
for Aer Lingus in 2007, saying a takeover would allow the
discount airline to dominate 35 routes and control 80 percent of
the market in Dublin, where Ryanair also has its headquarters.

Flybe will eliminate about 300 jobs and reduce its
divisions to two in an effort to restore profit, it said today.
The carrier is targeting a return to profit in fiscal year 2014.